Happy Leap Year, Thanks for the Extra Billable Hours

02/29/2012

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Bill by the hour law partners, associate attorneys and paralegals woke up this morning and breathed a small sigh of relieft.  

Today, February 29, 2012, provides an extra 24 hours of billable time, and it's landing on a weekday instead of the weekend.  Extra billable hours and no need to work over the weekend for them.  That's a double bonus.

Non-parter timekeepers--the associates and the paralegals--will huddle around the coffee station and quietly joke about how they hope "the firm" does not raise the billable hour target by an extra 8 hours.   Firm owners will joke that they should, and that the firms they worked for when they were associates always raised the billable hour target on Leap Years.

According to timeanddate.com, Leap Years are required to keep our calendar in alignment with the earth's revolutions around the sun. 

To billable hour professionals, the science is interesting, but not inspiring. 

What is inspiring to billable hour professionals is that today, the Leap Year Day, gives them an extra 24 hour opportunity to bill clients and to meet their billable hour annual targets.  

This year, things got just a little bit easier.

Happy Leap Year Day!   
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The All Nighter, Sleep Deprivation and the Value of Legal Services

02/27/2012

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Because I provide part-time general counsel legal service to the small to mid-sized business market, my friends who work in that sector share stories about working with their law firms.  For reasons lost on me, many of these companies gravitate towards larger law firms for all of their legal work.

A friend recently told me that he learned from a secretary at the large law firm his company uses that the law firm partner he works with was unavailable because he was napping after working a 48 hour marathon to get a transaction done.  This same friend reports that he routinely receives email from this same partner at 2am, and they work in the same time zone.  This partner charges somewhere between $500 and $600 per hour. 

More than anything else, lawyering is a thinking and judgment profession, and there is no question but that a lack of sleep impacts a person’s cognitive abilities.  If you need "authority"
for this proposition, check out the Perelman School of Medicine at the University of Pennsylvania, who published a study, Neurocognitive Consequences of Sleep Deprivation,  Jeffrey S. Durmer, M.D., Ph.D and David F. Dinges, Ph.D.  This  study states, “In general, regardless of the task, cognitive performance becomes progressively worse when time on task is extended; this is the classic ‘‘fatigue’’ effect that is exacerbated by sleep loss.”  

No surprise here.

My friend’s story about his sleep deprived large law firm partner speaks volumes about the value of legal services.  Keep in mind; this partner charges between $500 and $600 an hour, for every hour he bills a client.  

Can there be any question that a lawyer cannot possibly deliver $500 or $600 worth of value to a client for each of the 48 hours he worked in a 48 hour marathon?  Does anyone think their lawyer is on top of his or her game at 2am when he or she is answering email?   If the lawyer is not on top of his or her game because of sleep deprivation, should the law firm discount the hourly rate, and by how much?

This story also speaks to the culture of large law firms.  Their culture is to meet or exceed the annual billable hour target, and the desire to work well into the night and early morning to meet that target is sometimes too great to resist.  Perhaps the decision to keep working this late is impaired by sleep deprivation itself.   

I suggest to my friends who continue to work with large law firms that they should not allow their lawyers to bill them for work past 10pm.  I tell my friends who work with this kind of a law firm to simply say:  "If you're going to pull an all nighter, don't do it on our dime."
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Ten Ways You Might Be Able to Tell if You're Paying Your Law Firm Too Much

02/24/2012

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  1. Your law firm has a better view from its office lobby than you do from your office lobby.
  2. More people come to your law firm's employee picnic than your company picnic.
  3. Your law firm's holiday party is more grand than your company's holiday party.
  4. Your law firm offers paid sabbaticals to its partners. 
  5. Your law firm has a full time Director of Marketing on staff and you don't.
  6. Your law firm has more partners than you have employees.  
  7. Your law firm has more offices than your company does.
  8. When you call your law firm with an issue that is non-standard for your main lawyer contact, he or she refers you to "my partner" or "my associate" who handles that kind of an issue. 
  9. You are not spending your own money.  You spend investor money.  
  10. You do not have a part-time general counsel that hires and manages your company's outside law firm.
  11. Bonus - Your law firm's business model is to bill by the hour and to never offer guaranteed price quotes.
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Factoids Every Business Owner & Exec Should Know About Copyright Law

02/06/2012

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As a part-time general counsel to businesses, I run into this situation quite frequently so I hope this blog post can save prospective clients some money.

If you own or run a company and have hiring authority over independent contractors, you need to know a few factoids about copyright law.

The first, purely interesting, factoid to know about copyright law, is that the source for copyright law derives from the United States Constitution.   Article I, Section 8, Clause 8 of the United States Constitution, also known as the  Copyright Clause or the Copyright and Patent Clause  provides:  "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."   Thus, the idea behind the copyright law is to provide protection and incentives to authors to create useful "writings" such as literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture, and more recently the telecasting of NFL football games, website, blogs,  tweets, etc.

The second factoid to know about copyright law is that copyright law protects original  "works of authorship" that are "fixed in a tangible form of expression." Thus, if the content or work product is original and  written down  so you can hold it in your hands or see it with your eyes, it is protected by US Copyright Law.   This copyright protection attaches the moment it is created and fixed in a tangible form that it is perceptible either directly or with the aid of a machine or device.

The third factoid to know about copyright law is that copyright law applies even if the "author" does not file an application to register the copyright with the United States Copyright Office.   It's a good idea to register the copyright because additional protections are afforded to registered works as opposed to unregistered works, but it's not a requirement.

The Fourth factiod to know about copyright law applies to ownership, and this is a biggie.  The  general rule of copyright ownership is that the person who authors the work owns the copyright. If there is more than one author of the work–a joint work–all of the authors own the copyright.  However, the ownership rules and requirements are different depending on the employment or independent contractor status of the author.
  • Employees - If your company has employee "authors"  over whom the company has control, their content falls within the “work made for hire” definition, and the employer company owns the copyright.
  • Independent contractors - If your company hires independent contractor authors, their work falls within the “specially ordered or commissioned work” definition under the the Copyright Act, and the general ownership rule applies (the author owns the copyright) unless there is a signed written agreement that specifies that their work is a work made for hire.   Thus, you will need to include a reference to "work made for hire" in the written contact with the independent contractor.
One of our goals as part-time general counsel is to help business owners and executives learn and understand the law and how it applies to their business.  We hope this article was helpful.

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General Counsel Advice - Hidden Risks from Licensing Deals with Other VC Backed Tech Startups

02/06/2012

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As part-time general counsel, we work with startup companies on licensing transactions.   Here is an issue to keep a heads up over.

If you work for a tech startup company, and especially a venture backed startup, this article is for you.   If your software VC backed startup enters into enterprise software licensing contracts with other VC backed startup companies this article is really for you.

Question: What does your VC backed startup company have most in common with the VC backed startup companies with which it enters into enterprise software licensing agreements?

Answer:  Both companies are for sale to larger companies.

So, what are the business risks that arise  when your enterprise software customer is acquired by a larger company?   First, there is the risk, if you have not carefully drafted your licensing agreement, that you will have lost a larger customer.   The acquiring company may get perpetual right to use your enterprise software throughout its huge enterprise as part of the fruits of the acquisition.   Second, and far worse, there the risk that the acquiring company, which may be a potential purchaser of your VC backed company, will have no need to acquire your company because it can get all the rights it needs to your technology by purchasing your customer.

When two VC backed startup companies are entering into enterprise software licensing agreements, the licensing party should discuss what happens if and when the customer (licensee) is acquired.  The contract should include some agreed restrictions on the ability of an acquiring company to get the keys to your company's technology kingdom, and the ability to greatly expand the number of seats.  This is an area for negotiation, and it should not be ignored.

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